Analysts’ Capital Expenditures Forecasts and Career Outcomes

Abstract:     
Capital expenditures (CAPEX) forecasts are more and more popular in the financial analysis profession. I investigate determinants of CAPEX forecasts issuance and factors affecting CAPEX forecasts accuracy. I find that high quality analysts, analysts who engage in optimism walk-down strategies and analysts who have previously issued CAPEX forecasts are more likely to issue CAPEX forecasts. I also demonstrate that analysts who have more accurate prior CAPEX forecasts, more general experience and cover fewer firms are more accurate CAPEX forecasters. Moreover, I examine the role of CAPEX forecasts in analysts’ career and find that CAPEX forecasts issuance and CAPEX forecasts accuracy decreases analysts’ probability of leaving financial analysis profession.

Number of Pages in PDF File: 17

Keywords: Financial Analysts, Capital Expenditures, Forecasts

JEL Classification: G02, G31, G24

working papers series